Startup Metrics

Wayra BCN & MAD Bootcamp, March – April 2013

April 2013 Marcos Eguillor @marcoseguillor www.marcoseguillor.com

Startup Metrics @marcoseguillor 20130112

@marcoseguillor www.marcoseguillor.com

Startup Metrics @marcoseguillor

Wayra Bootcamp

Objectives of the session

•  Apprehend the Metrics of a Startup: Why, what, how •  Relate Startup Business Model and Value Proposal to

Phasing of a project and Metrics •  Assess Customer Lifecycle in term of Metrics •  Identify and Funnel Metrics for your Business •  Prepare Metrics for pitching

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Startup Metrics @marcoseguillor

WHY

Startup Metrics @marcoseguillor

your Value Proposal is how you get

attention

Startup Metrics @marcoseguillor

your Business Model is how you get

interest

Startup Metrics @marcoseguillor

your plan is how you get

analyzed

Startup Metrics @marcoseguillor

your team is how you get

credibility

Startup Metrics @marcoseguillor

your MVP is how you get

engagement and

validation

Startup Metrics @marcoseguillor

your Metrics is how you get the

deal

Startup Metrics @marcoseguillor

need any more reasons?

Startup Metrics @marcoseguillor

need any more reasons? For the Founding Team

•  Focus on your design/execution •  Be coherent •  Iterate/pivot based on findings,

not just gut feeling 1.

Startup Metrics @marcoseguillor

need any more reasons? For your Team

•  Have a (clear and profitable) goal 2.

Startup Metrics @marcoseguillor

need any more reasons? For your Investors

•  Assess whether know what you’re doing

•  Know more about the business •  Reduce uncertainty •  Evaluate the opportunity

(current and future)

3.

Startup Metrics @marcoseguillor

need any more reasons? Fight #FUD

Fear Uncertainty Doubt

…

Startup Metrics @marcoseguillor

WHAT

Startup Metrics @marcoseguillor

Financial Metrics

Operational Metrics

Startup Metrics @marcoseguillor

Financial Metrics cash flow – ROI – NPV – WACC

– 5 year projections …

blah blah blah*

* When speaking about Startups in their first heart-beats

Startup Metrics @marcoseguillor

Financial Metrics

http://i190.photobucket.com/albums/z57/lighthouse_emporium/no-bullshit.jpg

Startup Metrics @marcoseguillor

Financial Metrics Revenue rate

vs. Burn rate

(i.e. When would you run out of cash)

Startup Metrics @marcoseguillor

Financial Metrics

Operational Metrics

Startup Metrics @marcoseguillor

Operational Metrics

total subscribers – unique monthly users – pages viewed – CPx

… blah blah blah

Startup Metrics @marcoseguillor

Operational Metrics

but, are they really relevant to your business?

Startup Metrics @marcoseguillor

Operational Metrics

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What is your business about? What is your Value Proposition?

What is it that perfectly and accurately defines the core of your business?

Startup Metrics @marcoseguillor

Operational Metrics

What is a key driver to the business and needs to happen in

order to succeed with it?

http://www.coachfederation.org/includes/media/images/Business-Model-Canvas.jpg

Startup Metrics @marcoseguillor

Operational Metrics

Metrics =

f(type, stage)business

•  B2B, B2C, B2B2C •  Retail, Banking, Internet,

Media Biotech, etc.

•  Proto – MVP •  Comercially available

(with REVENUE) •  Expansion, etc.

Startup Metrics @marcoseguillor

Operational Metrics a Good Metric is

? What is a good Metric?

Startup Metrics @marcoseguillor

Operational Metrics a Good Metric is

relevant Tells you something KEY about YOUR biz at THIS moment.

It’s an add-on for your Tweet-Pitch

Startup Metrics @marcoseguillor

It allows you to decide, take actions, move forward. It ties to specific and repeatable actions

Operational Metrics a Good Metric is

actionable

Startup Metrics @marcoseguillor

Operational Metrics a Good Metric is

x/y A ratio. Truth is relative. Make you Metric relative

Startup Metrics @marcoseguillor

Operational Metrics a Good Metric is

a<>b Something comparable; now vs. then, here vs. there,

this vs. that, they vs. us

Startup Metrics @marcoseguillor

Operational Metrics a Good Metric is

a<>b Something comparable; now vs. then, here vs. there,

this vs. that, they vs. us

•  Listen to the outside •  Be humble •  Learn from others

Startup Metrics @marcoseguillor

Operational Metrics a Good Metric is

KISS SIMPLEdefine, simplemeasure, simpletrack, simpleact-upon,

simplecommunicate, simpleunderstand

Startup Metrics @marcoseguillor

Operational Metrics a Good Metric is

¤ ¤ today tomorrow

Something that moves you forward, helping accurately predict and get your goal

Startup Metrics @marcoseguillor

Operational Metrics a Good Metric is

change xperiment

The one that helps you test and evolve

Startup Metrics @marcoseguillor

Operational Metrics a Good Bad Metric is

? What is a bad Metric?

Startup Metrics @marcoseguillor

Operational Metrics a Good Bad Metric is

How’s your ego doing?

vanity

Startup Metrics @marcoseguillor http://www.coins-bloc.com/wordpress/wp-content/uploads/2011/07/white-noise2.jpg

white noise

Startup Metrics @marcoseguillor

too many (variables) Metrics

http://upload.wikimedia.org/wikipedia/commons/d/d3/White.noise.png

INFORMATION ≠ DATA

Startup Metrics @marcoseguillor

TOMTMN The One Metric That Matters Now

Startup Metrics @marcoseguillor http://www.salient.com.au/images/XR-Series/Days%20To%20Go.jpg

Startup Metrics @marcoseguillor

TOMTMN The One Metric That Matters Now

•  It changes throughout the time • Answers the most important question • No more noise. No more paralysis by analysis •  It helps the whole Team focusing • Encourages experimentation

Startup Metrics @marcoseguillor

HOW

Startup Metrics @marcoseguillor http://howtowasteyourtime.files.wordpress.com/2012/02/643792388-1.jpeg

Don’t cry (yet), it’s not that difficult!

Startup Metrics @marcoseguillor http://andrewskurka.com/wp-content/uploads/map-and-compass.jpg

A

B

Where do you want to go? Draw a map for the journey!

Startup Metrics @marcoseguillor http://www.freakarq.es/wp-content/Metropolis-05.jpg

What happens when you push one of the buttons?

Startup Metrics @marcoseguillor

As projects evolve and pass through different phases, Metrics should change according to the goals and conditions of each phase

Startup Metrics @marcoseguillor http://www.slideshare.net/njvitto/lean-startup-metrics-analytics

Typical conversion funnel But it depends on the business!

Startup Metrics @marcoseguillor

Activation

Acquisition

Retention

Referral

Revenue

Startup Metrics Framework - AARRR

http://cannons.com/wp-content/uploads/2012/09/Talk-Like-a-Pirate-Day-at-Cannons-Marina.jpg

Dave McClure Startup Metrics for Pirates

Startup Metrics @marcoseguillor

Acquisition

Startup Metric for Pirates - AARRR

How do you get Users? At what rate? What is the Bounce rate? What is the cost of acquiring these users?

Customer Acquisition Cost vs.

Customer Lifetime Value*

* Total revenue a customer has provided while being a customer; i.e. Total number of Months x Revenue/Month, where Month can be substituted by Year, Day, Hour, etc

Startup Metrics @marcoseguillor

Startup Metric for Pirates - AARRR

Do Users go beyond just asking for information, sharing personal/professional details, signing up the service or newsletter or following in the Social Media?

Active Users or Subscribers vs.

Registered Users

Activation

Startup Metrics @marcoseguillor

Startup Metric for Pirates - AARRR

Do Users come back? •  Found what they were looking for? Met

expectations? •  Cohort analysis •  Churn rate

Retention

Startup Metrics @marcoseguillor

Startup Metric for Pirates - AARRR

Do Users tell others? •  Viral Coefficient

•  Viral Cycle Time •  Net Promoter Score

Referral

http://technori.com/wp-content/uploads/NPS-en.jpg

New Members vs. Existing Members

Startup Metrics @marcoseguillor

Startup Metric for Pirates - AARRR

How do you make money? •  Related to Cost •  Lifetime Value; one shot vs. multi-shot •  Cancellation rate

Revenue

Startup Metrics @marcoseguillor

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Startup Metrics @marcoseguillor

Startup Metrics Framework - AARRR Example: OneProfile

Tweetpitch: Bio, CV and Certifications personal repository for quick automated sign-up to Social Media and services. Avoid retyping Business Model: Makes money through profile completion signup success to service providers. Per certificate to issuers (professional, educational) + sales/ad channel

Startup Metrics @marcoseguillor

Activation

Acquisition

Retention

Referral

Revenue

Startup Metrics Framework - AARRR Example*: OneProfile

Visits Sign-up per visit

Profiles exported per User

Requests to Certificate Issuers per User

Rules per User

Requests to Service Providers per User

Invites per User

Certif. linked per User Outbound Sales per Serv. Provider

Profile update per month

Profile updates per Serv. Prov.

Profiles/Certificates per User

* Not necessarily right; objective is to foster debate

Startup Metrics @marcoseguillor

Activation

Acquisition

Retention

Referral

Revenue

Startup Metrics Framework - AARRR Example:

Startup Metrics @marcoseguillor http://www.teatroguiniguada.es/images/background_cortina.jpg

HOW

Startup Metrics @marcoseguillor

*

* TSM Average: Trailing Six Month Compound Growth Rate; (ending_value/starting_value)^(1/num_periods-1)-1 http://tomtunguz.com/your-startups-10-most-important-metrics

How to present figures (if not graphic)

Startup Metrics @marcoseguillor

TOMTMN The One Metric That Matters Now

(at least, keep the focus)

Startup Metrics @marcoseguillor

When seeking investment and pitching, objectives of Metrics are showing: •  there is a business opportunity •  how (well) you’re doing things and

getting (positive) results •  you know how to exploit the market

opportunity, by proper execution •  your business is scalable

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Startup Metrics @marcoseguillor

Do you have a MVP; i.e. Have you tested the product/service against

the market?

Do you have a solid Value Proposal and Business

Model?

Where the hell are you going!? Keep on working!

Stop looking for investment; just bootstrap* and keep on working

*Unless your product/service needs hundreds of thousands or millions to be built

and there’s no way to test it against your market before moving forward

NO

NO

YES

YES

Customer Acquisition Cost vs. Customer Lifetime Value

Customer Acquisition rate Active vs. Acquired Subscribers (Conversion)

# Subscribers Bounce rate

Burn rate …

Do you have a relevant income already?

Metrics now depend (more) on your business…

Startup Metrics @marcoseguillor

Wayra Bootcamp

Examples of some Metrics related to GROWTH

•  New users added last month by channel/TSM growth rate: How well are we growing the user base? Which user sources are the best?

•  Total user base/TSM growth rate: How important is our monthly growth compared to our total user base?

•  Cost of customer acquisition, lifetime value, pay back period: Can we grow faster through paid acquisition? Are we acquiring customers profitably? How much can we afford to spend on new customers? How is this changing over time?

Tomasz Tunguz - Your Startup’s 10 Most Important Metrics

Startup Metrics @marcoseguillor

Wayra Bootcamp

Examples of some Metrics related to ENGAGEMENT

•  Active users (can defined in several different ways depending on your product) by channel/TSM growth rate: Are we getting better at giving our customers what they want/need? Which channels of users are most effective in finding us the right kind of user?

•  % of users using top 3 key features in a given month: Are our product initiatives the right ones?

Tomasz Tunguz - Your Startup’s 10 Most Important Metrics

Startup Metrics @marcoseguillor

Wayra Bootcamp

Examples of some Metrics related to REVENUE

•  Revenue / TSM Revenue growth: Are we growing our revenue?

•  Conversion to paid rate in that month/by cohort: How many users converted to paid? Are we improving our ability to convert customers to paid?

•  Avg spend per paying customer of a managed account vs solo account: What is the impact of the account management team?

•  Churn rate/ TSM Churn rate: How well do we retain our customers?

•  Burn rate: When are we profitable? When do we run out of cash? When do we need to raise?

Tomasz Tunguz - Your Startup’s 10 Most Important Metrics

Startup Metrics @marcoseguillor

remember

Startup Metrics @marcoseguillor

•  It’s about doing it BETTER. So that you need to take DECISIONS, for which you NEED INFORMATION (not just data) extracted from MEASUREMENT

•  RELEVANCY. For this Value Proposal and Business Model, for this Product/Market, from here to there, at this moment, with the surrounding conditions

•  Substantial IMPROVEMENT •  FOCUS. It’s not about you, it’s about the GOAL, the

TEAM and the INVESTOR •  KISS; Automate. Dashboard vs. TOMTMN •  KEEP DOING •  EVOLVE

Startup Metrics @marcoseguillor

Wayra Bootcamp

Well-dones, buhs and takeaways

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If it can be measure, it can be analyzed, then managed and improved Various sources

March 2013 Marcos Eguillor @marcoseguillor www.marcoseguillor.com

Startup Metrics

Wayra BCN & MAD Bootcamp, March – April 2013

Startup Metrics @marcoseguillor

Wayra Bootcamp

References and material

•  Dropbox. Startup Lessons Learned. Drew Houston, 2011. http://www.slideshare.net/gueste94e4c/dropbox-startup-lessons-learned-3836587

•  Guy Kawasaki on startup Metrics, mistakes, and enchantment. Paul Hontz, 2011. http://thestartupfoundry.com/2011/04/29/guy-kawasaki-on-startup-Metrics-mistakes-and-enchantment/

•  How Startups Can Use Metrics to Drive Success. Mark Suster, 2011. http://www.bothsidesofthetable.com/2011/04/04/how-startups-can-use-Metrics-to-drive-success/

•  How to Use a Single Metric to Run Your Startup. Ben Yoskovitz, 2012. http://blog.kissMetrics.com/single-startup-Metric/

•  Lean Startup Metrics. @stueccles, 2012, http://www.slideshare.net/stueccles/lean-startup-metrics

•  Lean Startup Metrics & Analytics. Nicola Junior Vitto, 2012. http://www.slideshare.net/njvitto/lean-startup-metrics-analytics

•  Startup Metrics 4 Pirates. Dave McClure, 2012. http://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-nov-2012

•  Startup Metrics in plain english. Raymond, 2012. http://flowventures.com/startup-Metrics-in-plain-english/

•  Your Startup’s 10 Most Important Metrics. Tomasz Tunguz, 2013. http://tomtunguz.com/your-startups-10-most-important-metrics

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